Latest FVU Version 5.4 and FVU Extract 2.150 e-TDS Software Free Download

Tin.nsdl has launched latest File validation utility FVU version 5.4 and FVU extract version 2.150 on 23 February 2017. This is e-TDS software for TDS returns. There are many new features added in latest FVU 5.4 which are as follows.

Validation for “PAN of Landlord” field has been revised for form 24Q-Q4 under Annexure II (i.e. Salary details) from F.Y. 2016-17 onwards.

Existing Validation of structurally valid PAN (for field no. 41, 43, 45 and 47 as per data structure) has been relaxed. These fields may contain any value from the below mentioned when the landlord does not have PAN.

1. GOVERNMENT: This is applicable when landlords are Government organizations (i.e. Central or State).

2. NONRESDENT: This is applicable when the landlords are Non-Residents.

3. OTHERVALUE: This is applicable when the landlords are other than
Government organization and Non-Residents.

Validation for non-update of Deductee/Collectee records from Annexure I and Annexure ll in TDS/TCS correction statements when Form 26A/27BA has been generated.

Deductee/Collectee against which Form 26A/27BA has been generated at Income Tax Department where update will not be allowed on certain fields in Annexure I of Form 24Q, 26Q and 27EQ while submitting correction statement.

The certain fields are as below:-
(1) PAN of Deductee/Collectee
(2) Amount of Payment/Credit
(3) Total tax Deducted (Tax + Surcharge + Education cess)
(4) Section code
Latest FVU Version 5.4 and FVU Extract 2.150 e-TDS Software Free Download

- Deductee against which Form 26A/27BA has been generated at Income Tax Department where no update or deletion of record will be allowed in Annexure ll of Form 24Q while submitting correction statement.

- Such Deuctee/Collectee records will be present in the TDS/TCS consolidated file with a flag value ‘F’ against the field ‘Mode’ as per specified file format.

- This is applicable from Financial Year 2007-08 onwards.

- e-TDS/TCS correction statements received with the changes not desired as per above, will be rejected at TDS CPC of Income Tax Department.

- Incorporation of latest File Validation Utility (FVU) version 5.4 (applicable for TDS/TCS statements pertaining to FY 2010-11 onwards) and FVU version 2.150 (applicable for TDS/TCS statements from FY 2007-08 up to FY 2009-10).

- This version of FVU is applicable with effect from February 23, 2017.
Download FVU 5.4
Download FVU Extract 2.150
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Latest Return Preparation Utility RPU Version 1.9 for e-TDS Statements

Tin.nsdl launched latest return preparation utility RPU version 1.9 for regular and corrective statements from Financial year 2007-08 and onwards. This new RPU 1.9 is in java platform which can be used either offline or online modes. There are many new features in RPU version 1.9 which are as follows.

“PAN of Landlord” field has been revised for form 24Q-Q4 under Annexure II (i.e. Salary details) from F.Y. 2016-17 onwards.
Existing Validation of structurally valid PAN for field no. 34, 36, 38 and 40 has been relaxed. These fields may contain any value from the below mentioned when the landlord does not have PAN.

1. Payment made to Government organization (Central/State only): This is applicable when landlords are Government organizations (i.e. Central or State).

2. Payment made to Non-resident: This is applicable when the landlords are Non-Residents.

3. Payment made to Other than Government organization and Non-resident: This is applicable when the landlords are other than Government organization and Non-Residents.

Non-update of Deductee/Collectee records from Annexure I and Annexure ll in TDS/TCS correction statements when Form 26A/27BA has been generated.

Deductee/Collectee against which Form 26A/27BA has been generated at Income Tax Department where update will not be allowed on certain fields in Annexure I of Form 24Q, 26Q and 27EQ while submitting correction statement.
Latest Return Preparation Utility RPU  Version 1.9 for e-TDS Statements

The certain fields are as below:-
(1) PAN of Deductee/Collectee
(2) Amount of Payment/Credit
(3) Total tax Deducted (Tax + Surcharge + Education cess)
(4) Section code

- Deductee against which Form 26A/27BA has been generated at Income Tax Department where no update or deletion of record will be allowed in Annexure ll of Form 24Q while submitting correction statement.

- Such Deuctee/Collectee records will be present in the TDS/TCS consolidated file with a flag value ‘F’ against the field ‘Mode’ as per specified file format.

- This is applicable from Financial Year 2007-08 onwards.

- e-TDS/TCS correction statements received with the changes not desired as per above, will be rejected at TDS CPC of Income Tax Department.

- Incorporation of latest File Validation Utility (FVU) version 5.4 (applicable for TDS/TCS statements pertaining to FY 2010-11 onwards) and FVU version 2.150 (applicable for TDS/TCS statements from FY 2007-08 up to FY 2009-10).
Download RPU 1.9
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CBDT Issues Standard Operating Procedure for Cash Transactions of Taxpayers

Post demonetisation of Rs. 500 and Rs. 1000 notes on November 8, 2016, several malpractices has been noticed. The Income Tax Department is enquiring/seeking information and analysing instances of deposits to identify cases involving risk of tax evasion. Based upon vast amount of information of cash deposits collected and analysed by CBDT, a number of persons have been identified in whose case the cash transactions did not appear to be in line with their profile available with the Income-tax Department ('ITD'). In such cases, it has been decided to undertake on-line verification of select transactions through jurisdictional Assessing Officers ('AOs').

2. OVERVIEW OF ONLINE VERIFICATION
The online verification has been enabled on e-filing portal (for persons under verification) which will be synchronized with the internal verification portal (AIMS module of ITBA) of ITD. The salient features of online verification mechanism are as under:

2.1 ITD has enabled online verification of these transactions to reduce compliance cost for persons under verification while optimizing its resources. The information in respect of these cases has been made available in the e filing window of the PAN holder (after log in) at the portal https://incometaxindiaefiling.gov.in. The PAN holder can view the information using the link 'Cash Transactions 2016' under 'Compliance' section of the portal. The person under verification will be able to submit online explanation without any need to visit Income Tax office.

2.2 Email and SMS were sent to the persons under verification for submitting online response on the e- filing portal. Such persons who are not yet registered on the e-filing portal (at https://incometaxindiaefiling.gov.in) should register immediately by clicking on the 'Register Yourself link. Registered taxpayers should verify and update their email address and mobile number on the e- filing portal to receive electronic communication.

2.3 The user guide, quick reference guide and frequently asked questions ('FAQs') are available on the portal for assisting the person under verification for submitting online response.

2.4 Cases meeting the low risk criteria will be closed centrally. Cases which are not closed automatically will be pushed in batches to the AO for verification.

2.5 The AO will be able to view each information record, information as submitted by the person under verification for each record and also capture the verification result. In case additional information is required, the AO will be able to send a request for additional information electronically. The person concerned will also be automatically informed about the request for additional information by email and SMS. The information request will be visible to the person under verification with a hyperlink for uploading information. All the additional documents (including supporting evidence) are required to be submitted online.

2.6 The response filed by person under verification will be appraised against available information. The uploaded information can be downloaded by the Assessing Officer. In case explanation of source of cash is found justified, the verification will be closed by the AO electronically without any physical interface with the person concerned.

3. REFERENCE DOCUMENTS
A Cash Transactions 2016 User Guide and Frequently asked Questions ('FAQs') has been prepared to help the persons under verification so that the process of furnishing online information is clearly understood (available in the help section of the e-filing portal home page). Further, a 'User Guide for Verification of Cash Transactions on ITBA - AIMS Module' ('Verification Guide) has also been prepared for assisting the AOs involved in the verification process. It is advised that all stakeholders may go through the documents before filing response/initiating action.

4. ENSURING ONLINE RESPONSE
It is seen that many persons in the target segment have still not registered with e-filing portal. Further many registered persons who are under verification have not yet submitted online response. Pr. CCIT/CCIT/Pr. CIT/Range Heads are expected to give publicity and organize meetings with the taxpayer community and CAs/Bar Associations to educate them about the online verification facility and its benefits. So far, communication with the person under verification has been made under section 133C of the Income-tax Act, 1961 ('Act'). In cases where online response has not been submitted, AO shall generate a letter from the Verification portal on ITBA to the person under verification for submission of online response (except when immediate survey is contemplated) on the e-filing portal and ensure its service. This process should be completed within 7 days of availability of information on the portal.

5. CONDUCTING VERIFICATION
At the outset, it should be clearly understood that this exercise relates to preliminary verification of information only and the same should not be construed as conducting scrutiny or in-depth authentication. The entire process envisages end-to-end e-verification in which the concerned person would be required to electronically file his response on e-filing portal which shall be examined and monitored electronically by the tax department through Online Verification platform (ITBA). The two systems are harmonized in a manner so that the person under verification is not required to attend the Income-tax office personally under any circumstance and at any stage during the verification exercise. It has been endeavour of CBDT to identify and target the potential cases through e-verification so that possible instances of grievances arising from the process of verification are minimized.

5.1 The online verification should be focussed and limited to the issue under verification the outcome of which is either 'Acceptable' or 'Non-Acceptable'. The queries raised should be relevant and limited in number since this is a preliminary verification process only.

5.2 The Assessing Officer is required to verify each information record individually and take a decision about each record being 'Acceptable' (where the nature and source of cash deposit for that particular record is explained by the person under verification to the prima-facie satisfaction of the Assessing Officer) or 'Non-Acceptable' (where the Assessing Officer is not satisfied with the explanations offered by the person under verification based on the information available). For each 'Non-Acceptable' information record, the undisclosed income will have to be ascertained and recorded along with verification remarks on the portal [the format has been reproduced in the Verification Guide].

5.3 The information relating to cash transactions and response submitted by the person under verification will be visible to the Assessing Officer and his supervisory officers.

5.4 The Assessing Officer will also be able to send a request for additional information, if required. The information request would be communicated to the PAN holder with a Hyperlink for uploading the information. The uploaded information can also be downloaded by the Assessing Officer.

5.5 It is reiterated that no independent enquiry or third party verifications are required to be made by the Assessing Officer outside the online portal. Whatever information is necessary during verification, the same has to be collected through the person under verification using online platform only. Even telephonic queries are to be avoided.

5.6 While conducting verification, seeking additional information and drawing inference regarding source of deposits in bank or other accounts, for general and broad guidance of the AOs, the source specific verification guidelines has been given in the Annexure with a view to maintain consistent approach during verification. If the sources informed by the person under verification are other than those indicated in the Annexure, suitable parameters should be decided by the AO in consultation with the range head and Pr. CIT concerned.

5.7 It should be ensured that the communications made online with the persons under verification should be in very polite language without containing any element of threat or warning. No show cause of any kind should be given.

5.8 The verification of a particular case shall be complete only when:

(a) each information record reflected in that case gets verified and has been marked either as 'Acceptable' or 'Non-Acceptable' (with mentioning of undisclosed income in the latter category); and
(b) Approval has been given by the supervisory authority as prescribed at Para 7 of this instruction.

5.9 If no satisfactory explanation is provided, the undisclosed income may be quantified considering the facts of the case. Brief summary of verification may be mentioned under verification remarks.

5.10 The cases under the 'Non Acceptable' category would get escalated back to the Directorate of Systems and may lead to advance processing of such cases for further handling as cases involving possible tax- evasion.

5.11 In case the person under verification does not respond within the time frame prescribed, it might lead to a possible inference that the cash deposit under verification is prima-facie undisclosed and consequently the AO may treat these cases under the 'Non Acceptable' category with relevant remarks.

5.12 A holistic view should be adopted looking into the various aspects of the circumstances leading to deposit of cash (e.g. family-size, financial status and background of person) and uniformity in approach must be adopted while forming a view about quantum of undisclosed income.
CBDT Issues Standard Operating Procedure for Cash Transactions of Taxpayers

6. ADHERENCE TO THE TIME-LIMIT DURING VERIFICATION
6.1 It shall be necessary to complete the process of online verification as quickly as possible so that the option to avail the benefits under the Prime-Minister Garib Kalyan Yojana, 2016 ('PMGKY') can be exercised by the persons under verification by the prescribed date for the said scheme. It will be desirable if the additional information required from the person under verification is communicated to the taxpayer within 5 working days (wherever considered necessary), from the receipt of online information from such person.

6.2 The Pr. CIT concerned should frame the intervening timelines depending upon the number of cases and content of information handled by the Assessing Officer in the charge.

6.3 The Additional/Joint CIT will monitor the adherence to the above time schedule and guide AOs wherever required.

7. APPROVAL FROM HIGHER AUTHORITIES
7.1 After all information records of a particular person have been verified by the AO, he would be required to take approval for closure of verification from the prescribed approving authority.

7.2 If the total value of transactions is below Rs. 10 lakh (Rs.25 Lakh in Delhi, Mumbai, Kolkata, Chennai, Bangalore, Pune, Hyderabad and Ahmedabad), the prescribed approving authority will be Additional/Joint CIT heading the Range. For cases where the total value of transactions in a particular case exceeds the above limits, the prescribed approving authority will be the Pr. CIT concerned.

7.3 The above approvals would be through online portal only for which the procedure has been specified in the Verification Guide.

7.4 The time-frame prescribed above in Para 6 will be inclusive of the time involved in granting approval by the prescribed approving authority.

8. DEALING WITH NON-COMPLIANCE
In cases where online response has not been submitted even after service of letter, the ITS profile of such PAN holders may be viewed to access information reported in earlier returns and under TDS/AIR/CIB. In case the cash deposit is not in line with the earlier return or information profile of the person under verification, necessary facts may be collected inter-alia by exercising the powers under section 133(6) with the approval of prescribed authority. In appropriate cases depending upon the online response or otherwise, survey action u/s. 133A can be considered. During survey, where there is suspicion of back dating or fictitious cash transactions, CCTV recording of the cash counter at relevant banks may also be checked, if necessary. Reference can also be sent to the Investigation wing in appropriate cases.

In cases of intrusive actions [133(6)/133A/ref. to Inv. Wing], the outcome needs to be reported by the AO in the online portal also.

9. INITIATION OF PENALTY PROCEEDINGS UNDER SECTIONS 269SS/269T OF THE ACT
In case, the transaction being loan received/repaid in cash above the permissible threshold comes to notice, the AO may consider initiation of penal proceedings under the relevant provisions separately.

10. FACILITATION
10.1 DIT(I&CI) has been designated as the local resource person for supporting the field formation in the e- verification process.

10.2 In case of technical difficulty, ITBA helpdesk and contact persons given in ITBA instruction may be contacted.

10.3 Further, clarifications would be issued by CBDT as and when required.

11. The above may be brought to the notice of all concerned.

ANNEXURE
Source Specific General Verification Guidelines 1.
1. Cash out of earlier income or savings
1.1 In case of an individual (other than minors) not having any business income, no further verification is required to be made if total cash deposit is up to Rs. 2.5 lakh. In case of taxpayers above 70 years of age, the limit is Rs. 5.0 lakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during past years and its source, filing of ROI and income shown therein, cash withdrawals made from accounts etc.

1.2 In case the individual claims that cash deposit includes savings of other person(s), the necessary information is required to be submitted under Para 4 or Para 5 below, as the case may be.

1.3 In case of an individual having no business income, if the cash out of earlier income or savings exceeds the above mentioned threshold, the AO needs to consider the remarks provided by the person under verification and seek further relevant information. During verification, the AO needs to consider the information provided by the person concerned, income earned during past years, source of such income, filing of ROI and income shown therein, cash withdrawals made from accounts etc. before quantifying the undisclosed amount, if any. In case the person under verification has filed return of Income, a reasonable quantum can be considered as explained while quantifying the undisclosed amount, if any.

1.4 In case of persons engaged in business or requirement to maintain books of accounts, no additional information is required to be submitted by the person under verification if total cash out of earlier income or savings (sum of responses for all cash transactions) is not more than the closing cash balance as on 31st March 2016 in the return for AY 2016-17. However, if the AO has reason to believe that the closing cash balance as on 31st March 2016 has been increased by revising the return or backdating transactions in the books of account, further verification may be carried out.

1.5 In case of persons engaged in business or required to maintain books of accounts, if total cash out of earlier income or savings (sum of responses for all cash transactions) is more than the closing cash balance as on 31st March 2016 in the return for AY 2016-17, the AO needs to consider the remarks provided by the taxpayer and seek relevant information, i.e. closing balance as on 31st March 2016 as reflected in the books of account. During verification, the AO may consider the information provided by the person under verification, income earned during past years, source of such income, filing of ROI and income shown therein, cash withdrawals made from accounts etc. before quantifying the undisclosed amount, if any.

1.6 If the person under verification has claimed that the cash deposit has been disclosed in IDS 2016 and if the same is found to be correct, no further verification should be made.

1.7 In case, there is information or apprehension/ suspicion that a particular bank account(s) has been misused for money laundering/tax evasion/entry operations in shell companies, the monetary cut-off or cash-balance based cut off prescribed in clauses above requiring no-verification, shall not be applicable.

2. Cash out of receipts exempt from tax
2.1 If the cash is explained to be out of receipts exempt from tax, and the same is not in line with the earlier returns filed by the person under verification, the AO needs to consider the remarks provided by the person and seek relevant information (e.g. records of land-holding and other relevant evidences etc. in case of agricultural income), to form appropriate view and quantify unexplained income.

3. Cash withdrawn out of bank account
3.1 The AO needs to consider the remarks provided by the person under verification and seek relevant information i.e. copy of bank statement/passbook to form appropriate view and quantify unexplained income.

3.2 Bank statement/passbook may be verified to confirm the name of the account holder. The date and amount of cash withdrawals and cash deposits in the bank account may be matched to verify whether claim that the cash deposited is out of cash withdrawn out of bank account is acceptable. Further removed in time the withdrawal is from the date of demonetization i.e. 8th November, 2016, the more suspicious it looks. The AO should take a balanced view in analyzing the time gap from the point of view of normal human behaviour and specific circumstances of the case.

4. Cash received from identifiable persons (with PAN)
4.1 No additional information is required to be submitted by the person under verification as the information will be pushed to the AO of the identifiable persons (with PAN).

4.2 In case the identifiable person (with PAN) does not confirm the transaction, the response will be referred back for further verification.

4.3 In case of a gift, it may be seen whether the same is taxable in the hands of the recipient under section 56(2) of the Act.

5. Cash received from identifiable persons (without PAN)
5.1 The AO needs to verify if the cash receipts are not in line with the normal practices of concerned business as mentioned in the earlier returns of Income after considering the remarks provided by the taxpayer, nature of business and earlier history before seeking additional information.

5.2 In case of other cash receipts, strategies for verification may be made in consultation with the Pr. CIT so that consistency is maintained in the entire charge based on nature of transaction.

6. Cash received from un-identifiable persons
6.1 The AO needs to verify if the cash transactions or its quantum are not in line with the normal practices of concerned business as mentioned in the earlier returns of Income.

6.2 During verification, the AO may seek relevant information e.g. monthly sales summary (with breakup of cash sales and credit sales), relevant stock register entries, bank statement etc. to identify cases with preliminary suspicion of back-dating of cash sales or fictitious sales. Some indicators for suspicion of back dating of cash sales or fictitious sales could be :

i. Abnormal jump in the cash sales during the period Nov to Dec 2016 as compared to earlier history.
ii. Abnormal jump in percentage of cash sales to unidentifiable persons as compared to earlier history.
iii. More than one deposit of specified bank notes in the bank account late in the demonetization period.

iv. Non-availability of stock or attempts to inflate stock by introducing fictitious purchases.
v. Transfer of deposited cash to another account/entity which is not in line with earlier history.

6.3 In case of receipt of cash on account of donation, indicators similar to above may be kept in mind.

6.4 In case of other cash receipts, strategies for verification may be made in consultation with the Pr. CIT.

7. Cash Disclosed/To be disclosed under PMGKY
7.1 In case the taxpayer mentions that the Cash Disclosed/to be disclosed under PMGKY, the same may be verified.

7.2 If the process of disclosure is informed to be pending, verification can be kept pending till the evidence is furnished.

7 3 The verification should be closed on the basis of evidence of disclosure made under PMGKY.

CBDT Issued 1.42 Lakh Crore Income Tax Refund Upto 10 February 2017

The Centralised Processing Centre (CPC) of the Income Tax Department (ITD) has already processed over 4.19 crore Income Tax Returns (ITRs) and issued over 1.62 crore refunds during the current financial year up to 10th February, 2017. The amount of refunds issued at Rs.1.42 Lakh Crore is 41.5% higher than the corresponding period last year.

As a result of emphasis on expeditious issue of refunds, 92% of all Income Tax returns were processed within 60 days demonstrating CBDT’s commitment to faster and more efficient taxpayer service. Of the refunds issued, 92% are below Rs.50,000 due to the high priority given to expeditious issue of refunds to small taxpayers. Only 2% of refunds less than Rs. 50,000 are remaining to be issued. Majority of these cases relate to recently filed ITRs or where the taxpayer’s response to the Department is awaited.
CBDT Issued 1.42 Lakh Crore Income Tax Refund Upto 10 February 2017

Taxpayers reposed faith in CBDT’s e-governance initiatives by filing electronically a whopping 4.01 Cr ITRs till 10th February 2017 representing an increase of 20% over the previous year. Also, more than 60 lakh other online forms were filed with an increase of nearly 41% compared to the previous year.

Taxpayers are advised to verify and update their email address and mobile number on the e-filing website to receive electronic communication. CBDT is committed to ensuring best possible taxpayer services through its e-governance programs and increasing the coverage and scope of electronic filing and processing of various forms and applications.

 (Meenakshi J Goswami)
Commissioner of Income Tax
 (Media & Technical Policy)
 Official Spokesperson, CBDT.

Income Tax Rule 40A(3) for Cash Payment Disallowance Reduced to 10000

Finance Minister Mr. Arun Jaitley in his budget speech reduced income tax cash payment limit under section 40 A (3) from Rs. 20000 to Rs. 10000. This rule will be applicable from 1 April 2017. So the limit to take cash from one person in one day is reduced to 10000. Full rule is as under.

Income tax has some rules to minimize the evasion of the payment made in cash. These rules are as follows.

1- Section 40A(3) a It provides that any expenditure incurred as a payment in sum of exceeding Rs.20000/-(From 1-4-2017, 10000 Rs.) otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS, shall not be allowed as a deduction. However if payment is being made for hiring or leasing, the limit is 35000.

2- Section 40A(3)(B) It also provides that the payment will be deemed as profits of the business if the expenditure incurred in the books but payment is made exceeding Rs. 20000 in cash, otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS.
Income Tax Rule 40A(3) for Cash Payment Disallowance Reduced to 10000

3- Section 40A (3) It provides that the payment in a single day should not be exceeding Rs. 20000(From 1-4-2017, 10000 Rs.). It doesn’t mean the single payment shouldn’t 20000 but the aggregate amount should not exceed the limit. Some parties split high value payment into several cash payment for evasion of section 40A (3) a, so this rule is for evasion of payments.

4- There is also a rule that payment made to a person in a single day, otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS, exceeds the limit; the payment will be deemed as profits of the company according to proposed sub-section (3) of section 40(A).

Direct Tax Collection for January Show Growth of 10.79%

The Direct tax collections up to January 2017 show a consistent growth trend. The collection net of refunds stands at Rs. 5.82 lakh crore which is 10.79% more than the net collections for the corresponding period last year. This collection is 68.7% of the total Budget Estimates of Direct Taxes for Financial Year 2016-17.

As regards the growth rates for Corporate Income Tax (CIT) and Personal Income Tax (PIT), in terms of gross revenue collections, the growth rate under CIT is 11.7% while that under PIT (including STT) is 21.0%. However, after adjusting for refunds, the net growth in CIT collections is 2.9% while that in PIT collections is 23.1%. Refunds amounting to Rs.1.41 lakh crore have been issued during April 2016-January 2017, which is 41.0% higher than the refunds issued during the corresponding period last year.
Direct Tax Collection for January Show Growth of 10.79%


 (Meenakshi J Goswami)
Commissioner of Income Tax
 (Media & Technical Policy)
Official Spokesperson, CBDT.

Long Term Capital Gin Calculator After Change in Base Year

Finance Minister Mr. Arun Jaitley made significant announcement in terms of long term capital gain taxation and indexation which is base year as base year for indexation is changed from 1981-82 to 2001-02.

There will be impact on changing the base year 2001-02 for calculating the long term capital gain. Let try to understand it with examples and calculator.


How indexation helps

When someone purchase an asset, normally the value of asset increases year after year. Some part of this increase value is because of inflation.

Like we purchase a Kgs of Apple for Rs. 50 today and the same apple for Rs. 60 after an year. The value of Rs. 10 is because of inflation as apples are same.

Same as apples a part of increase of value of asset is because of inflation. So as per income tax rule, for the value increase due to inflation, you needn’t to pay capital gain for it.

CBDT issued cost inflation index every year for calculation of long term capital gain.

The indexation benefit is only available for long term capital gain and not for short term capital gain.
Long Term Capital Gin Calculator After Change in Base Year

How change in base year impact you.


Long Term Capital Gains = Sales price – Indexed cost of acquisition (and improvement)
Sales price is easy to figure out. After all, you just sold the asset.

For the Indexed Cost of Acquisition, you need to find out the Cost of Acquisition and inflate it to find Indexed Cost of Acquisition.

As per Section 55 of the Income Tax Act,
Cost of acquisition, where the capital asset became the property of the assessee before the 1st day of April, 1981, means the cost of acquisition of the asset to the assessee or the fair market value of the asset on the 1st day of April, 1981, at the option of the assessee;   

April 1, 1981 to be replaced with April 1, 2001 (from April 1, 2018 as per the budget announcement)
So, as per the existing law, if you acquired a capital asset before 1981, it is your discretion to choose the cost of acquisition. You can choose it to be the actual cost or the Fair Market Value as on April 1, 1981.

Of course, you will pick up the higher one. Sometimes, it is not possible to find the actual cost of asset especially for those properties that you have inherited.  In such cases, you have to go for FMV.

As per Section 48 of the Income Tax Act,
“indexed cost of acquisition” means an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981*, whichever is later;

April 1, 1981 to be replaced with April 1, 2001 (from April 1, 2018 as per the budget announcement)
Now that the base year has been changed from 1981 to 2001, you will have to apply CII value for FY 2001-2002 (from next year). CII for 1992 will not exist for taxation purposes



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CBDT Signs Another Four Advance Pricing Agreements

The Central Board of Direct Taxes (CBDT) has entered into four more unilateral Advance Pricing Agreements (APAs) on 6th February, 2017.

The four APAs signed pertain to the Manufacturing, Financial and Information Technology sectors of the economy. The international transactions covered in these agreements include Contract Manufacturing, IT Enabled Services and Software Development Services.

With this, the total number of APAs entered into by the CBDT has reached 130. This includes 8 bilateral APAs and 122 Unilateral APAs. In the current financial year, a total of 66 APAs (5 bilateral APAs and 61 unilateral APAs) have already been entered into. The CBDT expects more APAs to be concluded and signed before the end of the current fiscal.

The APA Scheme was introduced in the Income-tax Act in 2012 and the “Rollback” provisions were introduced in 2014. The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the prices of international transactions in advance. Since its inception, the APA scheme has evinced a lot of interest from taxpayers and that has resulted in more than 700 applications (both unilateral and bilateral) being filed so far in about five years.
CBDT Signs Another Four Advance Pricing Agreements 

The progress of the APA Scheme strengthens the Government’s resolve of fostering a non-adversarial tax regime. The Indian APA program has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.

 (Meenakshi Goswami)
Commissioner of Income Tax
 (Media & Technical Policy)
Official Spokesperson, CBDT.

India and Austria Signs Double Tax Avoidance Agreement

India and Austria signed a Protocol amending the existing Convention between the two countries for Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income today at New Delhi. The Protocol was signed by Shri Sushil Chandra, Chairman CBDT on behalf of India and Mr. Georg Zehetner, Charge d’ Affaires, Embassy of Austria on behalf of Austria.

The Protocol will broaden the scope of the existing framework of exchange of tax related information which will help curb tax evasion and tax avoidance between the two countries and will also enable mutual assistance in collection of taxes.
India and Austria Signs Double Tax Avoidance Agreement

 (Meenakshi Goswami)
Commissioner of Income Tax
 (Media & Technical Policy)
Official Spokesperson, CBDT.

Income Tax Calculator for FY 2017-18 Relevant to AY 2018-19

Finance Minister Mr. Arun Jaitley presented the budget on February 1. In this budget there are some changes in the income tax slabs and structure which changes all income tax calculations for financial year 2017-18. These changes are as under.


  1. Income tax rate is on slab 250000-500000 is 5% for FY 2017-18 which was 10% earlier.
  2. Rebate u/s 87A which was earlier given upto Rs. 500000 slab is reduced to Rs. 350000.
  3. 10 percent surcharge on 50 lakh to 1 crore income.
  4. 15% surcharge on above 1 crore income.
So there is an excel based calculator for calculation of income tax for individual, senior citizen as well as super senior citizen.


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Big Annoucments in Busget 2017 fpr Individual and Corporates

For Individual the big annoucements in union budget 2017 are as follows.

1- The maximum amount of cash donation for political party will be Rs. 2,000 from any one source


2- FM proposes to reduce basic customs duty on LNG from 5% to 2.5% in 2017-18

3- Finance Bill proposes ban on cash transactions above 3 lakhs

4- 2001 shall be the base year for calculating the capital gains instead of existing 1981

5- Capital Gains: Holding period for immovable property is reduced to 2 years

6- Service Charge on IRCTC ticket booking will be removed

7- Finance Bill proposes ban on cash transactions above 3 lakhs

8- Capital gains tax to be exempted for the land acquired for creation of Telangana


9- Govt. proposes levy of surcharge of 10% for income between Rs. 50 lakhs and Rs. 1 crores

10- FM proposed no change in Exemption limit but reduces tax rate to 5% for income between 2.5 lac to 5 lacs

11- Threshold limit for audit of entities opting for presumptive taxation under Section 44AD is increased to 2 crores

12- Presumptive income under Section 44AD for digital receipts is reduced to 6%

13- Capital gain tax under Joint Development Agreement to be levied in a year of completion
Big Annoucments in Busget 2017 fpr Individual and Corporates

For Corporates the big annoucements are as under.

1- Jaitley proposes changes in Profit linked deduction for affordable housing scheme

2- Threshold limit under Section 40A(3) for payment of expenses in cash is reduced to Rs. 10,000

3- Corporate tax rates for small companies with turnover of up to Rs. 50 crore is reduced to 20%

4- Govt. proposes to extended facility of Concessional withholding rates on interest payable to foreign entities

5- Govt. proposes carry forward of MAT Credit for a period of 15 years instead of 10 years

Highlights of Tax Proposal of Union Budget 2017

The Union Budget 2017 was laid before the Parliament today by the Hon’ble Finance Minister of India. The salient features of Direct Tax proposals are summarised below:

I. Affordable Housing:
1. Three concessions in the scheme of Income Tax exemption for affordable housing:
(a) Area of 30 and 60 Sq.mtr. to be counted as carpet area and not built-up area;
(b) 30 Sq.mtr. only in 4 metropolitan city limits and 60 Sq.mtr. for the rest of the country;
(c) Completion period extended from 3 years to 5 years.

2. Tax on Notional rental income for builders to be calculated only after 1 year from the end of
the year in which completion certificate is received.

3. Changes in Capital Gain taxation for immovable properties:
(a) Holding period reduce for computation of long term capital gain from three years to two years
(b) Base year for counting the cost of property shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property.

4. Basket of financial instrument in which capital gain can be invested without payment of tax to be expanded.

5. For joint development agreement, the liability to pay capital gain tax will arise in the year in which project is completed.

5. For Andhra Pradesh capital, land belonging to owners as on 2.6.2014 to be exempted from capital gain if the same is offered under land-pooling mechanism.

II. Measures for stimulating growth:
1. Concessional withholding rate of 5 per cent. for interest received by foreign entities on loans given in India to be continued for another 3 years beyond 30.6.2017.

2. Start-ups to get two relaxations under the scheme of Income Tax holiday given last year.
(a) The condition of continuous holding of 51 per cent. voting rights to be relaxed as long as the original investment of promoter is not diluted.
(b) Exemption available for three years out of any 7 years from the date of establishment instead of 3 out of 5 years

3. The period of carry forward of MAT/AMT credit increased from 10 years to 15 years. 

4. The corporate income tax to be reduced from 30% to 25% for companies with turnover upto Rs.50 crore in 2015-16. This will benefit 96% of existing 6.67 lakh companies. This will result into tax saving of 16.67% for these companies.

5. Deduction for provision for NPA of Banks to be increased from to 8.5% instead of 7.5% of profit.

6. In case of NPA of non-scheduled cooperative banks, interest to be recognised as income only when received.

III Promoting Digital Economy:
1. In the presumptive income tax for small traders, income to be taken as 6% of turnover which is received by digital or banking means.

2. Cash expenditure allowable to be reduced to Rs.10,000 from the existing Rs.20,000.

3. Cash transaction of above Rs.3 lakh not to be permitted. The penalty of equal amount to be levied in case of breach.

IV Transparency in Electoral Funding:
1. The cash donation to political parties from one person limited to Rs.2,000/-.
2. Electoral Bond to be introduced for facilitating donation to political parties from explained sources.

3. Political parties to file their return in time limit prescribed in the Income Tax Act.

V. Ease of Doing Business:
1. Domestic transfer pricing to be applied only if one of the two companies enjoys specified profit-linked deduction.

2. The audit limit for business entities opting for presumptive scheme to be increased from Rs.1 crore to Rs.2 crore.

3. Individuals and HUFs not required to keep books of accounts if their turnover is up to Rs.25 lakhs or income is upto Rs.2.5 lakhs.

4. Investment in Category 1 and 2 foreign portfolio investors registered with SEBI to be exempted from provisions of indirect transfer.

5. TDS of 5% not to be deducted for individual insurance agents if they certify their income to be below taxable limit.

6. Professionals in presumptive scheme to pay advance tax only in one instalment in March instead of four.

7. The time limit for revising a tax return reduced to 12 months. Also time limit for completion of scrutiny will be brought down to 12 months from Assessment Year 2019-20 onwards.
Highlights of Tax Proposal of Union Budget 2017

VI Personal Income Tax:
1. Personal income tax for people with income in the slab of 2.5 lakh to 5 lakh to be reduced to  5% instead of 10%. This will reduce their tax liability to half while all other tax payers above this slab will also be benefited in terms of lesser tax of Rs.12,500 per individual (revenue loss ofRs.15,500 crores).

2. Surcharge of 10% to be levied on individuals with income between Rs.50 lakhs to Rs.1 crore
(revenue gain of Rs.2,700 crore).

VII. Miscellaneous:
1. TCS exemption for state transport corporation in respect of purchase of vehicles.

2. Income of Chief Minister’s relief fund exempt from tax.

3. Penalty on accountant, registered valuer and merchant banker for furnishing incorrect information.

4. In order to ensure timely filing of return and expeditious issue of refund, a fee shall be levied for delay in filing of return.

Meenakshi J Goswami
 Commissioner of Income Tax
 (Media and Technical Policy)
 Official Spokesperson, CBDT.
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